5 accounting finance best practices for tech companies
One of the biggest threats to a growing technology company is poor accounting practices. All it takes is a dishonest employee or an honest miscalculation to send your bottom line into a nosedive.
Besides appeasing Uncle Sam, you need the peace of mind that comes with knowing your business is in good financial standing.
How can you make important business decisions like hiring more people, or adding infrastructure, if you don’t know how the books look?
Enter finance and accounting. More than just tough college majors, these functions keep track of monetary transactions. Using detailed guidelines, the transactions are recorded, summarized, and presented in financial reports, such as an income statement or balance sheet. The objective of the reports is to provide a financial analysis with which to make sound economic decisions.
The accuracy of data and financial predictions needs to be spot-on. Streamlining and automating the flow of this information reduces the opportunity for error, eliminating human errors, which, in turn, affects the allocation of resources for all other areas of the company. Meaning, you can do more without adding additional staff.
Finance and accounting automation provides the peace of mind you need to grow your business with confidence.
Here are five best practices to consider when planning key accounting and finance activities:
1. Get in sync
Don’t get stuck managing multiple data sets in multiple databases. Managing multiple entries results in inaccuracy, time delays, and unhappy employees. Identify the source of truth for your key pieces of data, and make sure your systems are synchronized.
2. No surprises
Regular, accurate financial reporting will ensure that the executive team is ahead of the game. A centralized database enables them to respond strategically, in a timely fashion, and never be caught off guard.
3. Cash is king
Time delays related to cash flow can have an enormous negative impact on the business. Measuring accounting velocity will make sure you’re focused on having the least amount of outstanding cash.
4. Truth it
Finance 101 recommends presenting an accurate representation of the business’ performance each period. Having multiple systems that are manually connected makes this virtually impossible. Integration and consistency between systems will accelerate your ability to ‘truth it’ and have a source of truth for data in order to validate information.
5. Leave nothing to chance
Thorough reconciliation of your financial systems will make sure you are invoicing as you should, paying the proper accounts, and not misrepresenting your company’s value.
Few would say managing the numbers is the most exciting aspect of their role, but numbers are the lifeblood of your organization. A combination of synchronized systems, automation, and reporting can give you the insight you need to make good high-level financial decisions.